Craig Harman explains the new plastic packaging tax will mean for businesses and why they should be planning for the changes now.\n\n\n\nThe UK uses an estimated five\nmillion tonnes of plastic every year, nearly half of which is packaging.\n\n\n\nAs the plastic problem worsens, countries across the globe have\nbeen looking at ways to deal with overflowing landfill sites and polluted\nsoils, rivers and oceans.\n\n\n\nAs part of its commitment to reduce plastic packaging and waste,\nthe UK government announced in 2018 that it would be introducing a plastic\npackaging tax from April 2022. \n\n\n\nWhy a plastic\npackaging tax?\n\n\n\nThe UK government is aiming to\nsignificantly reduce the amount of virgin plastics (plastic produced entirely\nfrom plastic resin that hasn\u2019t been used or processed before) that are being\nsent to landfill or being burned. It is also hoped that by introducing the\nplastic packaging tax, companies will be encouraged to look at more sustainable\nalternatives for packaging their products and consumers will be motivated to\nrecycle packaging instead of throwing it away. \n\n\n\nThe new tax, which will come into force from April 2022, will\nrequire producers of plastic packaging manufactured in, or imported into, the\nUK to pay \u00a3200 per tonne of plastic packaging if it contains less than 30%\nrecycled plastic, and is plastic packaging that is predominantly plastic by\nweight. \n\n\n\nPlastic packaging that has been imported will be liable to the\ntax, whether it is unfilled or filled.\n\n\n\nHowever, the tax will not apply to manufacturers and importers of\nless than 10 tonnes of plastic packaging per year, packaging exported from the\nUK, or packaging that is used for licenced human medicines.\n\n\n\nWho will the\ntax affect?\n\n\n\nIt is estimated that 20,000\nproducers and importers of plastic packaging will be affected with a\nsignificant impact on a wide range of industries, including manufacturing,\nlogistics, freight, transport, haulage and construction.\n\n\n\nThe new tax is likely to impact a wide range of businesses with\nadditional costs, including understanding how the tax is implemented and\nkeeping relevant records. For example, food and drink legislation stipulates,\nthat in some circumstances, using recycled plastic packaging for food is\nforbidden and, therefore, food manufacturers will need to pay the tax for using\nvirgin plastics. \n\n\n\nThere is also the added issue of how the tax will translate to\nconsumers, who are likely to feel the knock-on effects of these extra costs,\nwhich could raise prices of some products, like food, by around 10% to 20%.\n\n\n\nPlanning for\nthe tax\n\n\n\nIt is important that businesses do\nnot delay with finding alternatives to plastic packaging and start planning now\nto ensure they are fully prepared for the April 2022 deadline.\n\n\n\nAs already mentioned, plastic packaging that contains at least 30%\nrecycled materials will be exempt from the tax, so companies are being\nencouraged to find suitable alternatives that meet or exceed these\nrequirements. \n\n\n\nBusinesses that are uncertain about what the plastic packaging tax\nmight mean for their operations should seek the advice of a professional\naccountant, who will be able to guide them through the legislation and\nrequirements.\n\n\n\nIt is important to remember that, despite the potential cost\nimplications for businesses and consumers, the plastic packaging tax is likely\nto have a positive impact on our environment, changing business operations for\nthe better and ensuring our planet is protected for the future.\n\n\n\nCraig Harman is a tax specialist and partner at Perrys Chartered Accountants. Go to www.perrysaccountants.co.uk.